Winding-up petitions on the whole are most often deployed by Her Majesty’s Revenue & Customs (HMRC) as a debt recovery weapon of last resort and the issuing of petitions is informally described within HMRC as their tool to “cleanse capitalism”.
When do HMRC issue a winding-up petition?
HMRC state in their literature accompanying the postal service of a HMRC petition that (i) they only start winding-up proceedings because companies or partnerships owe HMRC money and (ii) that HMRC will usually have taken other enforcement action to obtain payment and the business will have either not paid at all or made unacceptable proposals for settling the debt.
How much does the debt have to be to issue a winding-up petition?
The debt on a HMRC petition will, as per all petitions be for a sum of at least £750, and will usually be in the order of tens to hundreds of thousands of pounds. We have successfully defended HMRC petitions where debts have been well in excess of one million pounds. HMRC will include in their petition a breakdown of the debt figure which denotes how they arrive at the total figure.
The monies owed to HMRC could be for unpaid VAT returns, unpaid VAT assessments, PAYE payments, Employer’s National Insurance Contributions, unpaid corporation tax and so on.
What is the procedure for HMRC to issue a Winding-up Petition?
Winding up petitions may be issued at Court against either a Company or a Partnership, the latter (a petition to wind up a partnership) is usually when issued by HMRC accompanied by individual HMRC bankruptcy petitions for each of the partners.
A HMRC winding up petition is the precursor to the compulsory liquidation of a company or the dissolution of a partnership if not properly dealt with by the Directors or Partners and in essence means that the Revenue, their solicitor’s office and their barrister is asking the Court to wind up your business and have an insolvency practitioner distribute the assets of that business amongst all creditors.
If the Companies Court Registrar agrees with HMRCs barrister at the court hearing of the petition to liquidate and close down the company then the Court issues a winding-up order. The Company then has to cease to trade. The bank account will have already become frozen on advertisement of the petition by HMRC. The Official Receiver, a Government civil servant, then investigates the company and the conduct of the directors. The assets are liquidated to pay of the debts of the company by a nominated Insolvency Practitioner.
What happens at the winding up petition hearing?
After service of the winding up petition, the Court is involved and a date will be set for a winding up petition hearing.
Who attends the winding up petition hearing?
The petitioner, creditors, anyone with an interest in the company’s property, the company and its’ shareholders all have the right to attend the hearing and be heard at the hearing.
Where is the hearing?
In London, winding up petitions are heard at the Insolvency and Companies Court from 10:30am in the Rolls Building, Fetter Lane, London, EC4A 1NL.
We are located 5 minutes walk from the Court and are therefore able to provide urgent representation. However, this is subject to capacity and receiving instructions in a timely manner.
Expert HMRC Petition Solicitors
As specialist winding up lawyers, we can help the company to get enough time to manage or settle large debts or to dispute the monies claimed in the petition.
With the correct legal guidance it is perfectly possible to obtain time and resolve the debt even if HMRC won’t initially agree to sensible time to pay proposals; there are legal arguments and applications that can be deployed in the company’s favour. If the company cannot repay all its HMRC debts, we can also advise on a range of other solutions that will allow the company to continue to trade.
The insolvency and Court rules relating to winding up proceedings are a technical minefield; as expert winding up petition solicitors we help our clients to avoid suffering the ‘usual compulsory order’. We assist by protecting the companies interests and by negotiating with creditors and advising and representing the company at Court.
Retaining insolvency solicitors and barristers in particular assists in dealings with HMRC who will know a company is taking matters seriously and responsibly when the company instructs specialists such as ourselves.
When a business is insolvent or is served with a HMRC petition and runs the risk of becoming wound up, the owner or the directors have a duty to act in the best interests of the creditors. Failing to do so risks personal liabilities and possible directors disqualification proceedings.
We provide specialist senior legal advice from solicitors and barristers at the outset when it absolutely matters in choosing the best strategy to follow (especially when dealing with the defence of a HMRC petition).
We assist our clients by:
- Opposing or stopping a winding up petition;
- Obtaining an adjournment of winding up proceedings;
- Applying for injunctions to restrain advertisement in the London Gazette;
- Applying to the Court for validation orders to unfreeze bank accounts;
- Liaising with HMRC and other creditors;
- Court representation and advocacy before a Registrar or Judge
- Advising the Company or Partnership on winding up petition procedure
- Advising Directors on risks and insolvency routes
- Developing (and aiding implementation of) strategies that allow the business to continue
HMRC Petition Advice
If you have received a HMRC winding up petition we are able to provide urgent help, advice or representation. We provide expert legal advice from our team of leading HMRC Petition Solicitors or Barristers. Just call or email us now for a free initial consultation; we are waiting to help.
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We analyse and work out the legal merits of running your case to trial. We calculate and advise on legal risk factors and the litigation rules in England & Wales. We factor in your risk-appetite, costs sensitivity and determination. We plan the best possible result. We deliver strategic legal advice at your first meeting.
Want your case assessed? Just fill out our simple enquiry form; it goes immediately to our litigation team in Middle Temple, London. Or call our London litigation lawyers on ☎ 02071830529 (9-6 GMT, M-F).
Please note that if you have been warned about your file being passed to HMRC’s Solicitor’s Office or have been served a statutory demand or winding-up petition do not delay in taking legal advice. Your matter can be handled more effectively the sooner you contact us.